Who benefits from factoring?
What are other advantages of factoring?
Who should factor?
Is factoring like using a credit card?
Are Factors really just collection agencies?
Do factors charge interest?
Do factors loan money?
Do factors set credit limits?
“If I throw a rock, I will hit a factor, is that a bad thing…”
How do I choose a factor for my company?
Is location important?
How involved do I want my factor to be in my business?
How will my business grow when using a factoring company?
What am I willing/able to spend for this service?
How long do I anticipate needing to factor my invoices?
How does money flow into and out of your business?
When shopping for a factor, what should I ask/what do I need to know?
Will I need to open a separate account to receive funds from my factor?

Who benefits from factoring?

Most businesses can benefit from factoring. The factoring client is able to turn an asset into instant cash, thereby creating much needed cash flow to operate the business. Increased cash flow can help a growing business to do things like:

Who should factor?

There are many businesses that find that the ease and convenience of factoring make it a desirable form of cash-flow management on an occasional or ongoing basis. At LDI, we strive to help these businesses grow.

Is factoring like using a credit card?

No. This is a common comparison and it is like comparing apples and oranges. When you use a credit card, you are creating debt that requires a monthly payment and an interest charge on the unpaid balance. With factoring, you are selling something that you own at a discount.

Are Factors really just collection agencies?

Absolutely not. At LDI Growth Partners, we are not in the business of collecting past due debt. We are in the business of helping companies meet their cash-flow needs. Part of the service we offer is to work with your customers so that late payments are reduced. We have found that often times our involvement with a client and their customers reduces the average pay time on invoices.

Do factors charge interest?

No. Factors purchase invoices at a discount.That discounted amount is determined by the length of time the invoice is outstanding.

Do factors loan money?

No. The relationship between a factor and its client is that of buyer and seller, not one of lender and borrower. There is no annual interest rate and no monthly minimum payment. Each invoice that is purchased is its own transaction.

Do factors set credit limits?

Some do and some do not. At LDI, we set credit limits for each client, based on the client’s cash needs and monthly revenue.

“If I throw a rock, I will hit a factor, is that a bad thing…”

It is a GREAT thing! If you are looking for a factor, it can seem daunting that there are so many to choose from. Each company has its own flavor and personality. It is much like choosing a hairdresser, barber or insurance agent.

How do I choose a factor for my company?

Make a list and ask yourself what your needs and expectations are. The right factor should meet as many of your needs as expectations as possilble.

Is location important?

Technology being what it is today, most transactions can be completed over the internet or telephone. Is it important to you that your factor can meet you for a cup of coffee to discuss an issue or problem or are you comfortable with a long distance relationship?

How involved do I want my factor to be in my business?

Ask yourself - Do I want a factor who simply wires money into my bank account, or do I want an advocate and a resource who understands the pitfalls of growing my business, someone I can turn to when the chips are down or to share a success?

How is my business growing?

Are you a start-up or an established company in a rapid growth phase? Are you planning your growth carefully or have you just been presented with the opportunity of a lifetime that you are scrambling to get your ducks in a row so you can take advantage of that opportunity?

What am I willing/able to spend for this service?

If price alone is your driving concern, ask yourself some additional questions:

How long do I anticipate needing to factor my invoices?

Are you looking for help on a single transaction, contract or customer? Is your company work seasonal? Is factoring a long-term cash management tool, or a short-term jump-start?

How does money flow into and out of your business?

Will factoring my invoices help to position my company for true growth or am I simply looking to increase my bank balance to survive?

When shopping for a factor, what should I ask/what do I need to know?

You want to know how the factor views client relationships. You should also ask about contract requirements. Are there minimum factoring requirements? Are there requirements for certain term limits (often 12-24 month contract terms). What is the factor’s ideal client relationship? How flexible is the underwriting/review process? Does the factor have experience in your industry or a similar industry? Who makes the funding decisions? Are you talking to a decision maker?